Compensation

DirectIndirect PayIncentivesBenefits

I. Basic Compensation Considerations II. Strategic Compensation A. Compensation Philosophies 1. Entitlement Orientation 2. Performance Orientation B. Compensation Bases 1. Time vs. Productivity 2. Task-Based vs. Knowledge and Skill-Based Pay III. Compensation Strategies and Objectives Three objectives: A. Legal Compliance B. Cost Effectiveness C. Equity

1. Procedural and Distributive Justice in Compensation 2. Secret vs. Open pay Systems IV. Legal Constraints A. Fair Labor Standards Act (FLSA) 1. Employees Covered 2. Exempt and Nonexempt Status Factors to consider: Discretionary authority for independent action Percentage of time spent performing routine, manual, or clerical work Earnings level

Jobs can be categorized in three groupings: Hourly Salaried-nonexempt Salaried-exempt 3. Minimum Wage 4. Overtime Provisions 5. Compensatory Time-Off 6. Child-Labor Provisions B. Equal Pay Act of 1963

V. Wage and salary Administration A. Pay Policies B. Union and Compensation

VI. Development of a Base Pay System A. Job Evaluation Relative Importance Relative Skills Difficulty of one job compared to other jobs 1. Ranking Methods 2. Classification Method 3. Point Method 4. Factor Comparison 5. Computerized Job Evaluation 6. Job Evaluation and Pay Equity B. Pay Surveys C.Pay Structure

Pay Scattergram

V. Individual Pay A. Pay Compression B. Pay Increases 1. Pay-for-Performance Systems 2. Seniority 3. Lump-Sum Pay Increases (LSI)